Subwords are words which use some of the letters of a subject. For example, "meal" is a subword of "Michael" as it uses four of its seven letters. However, "meat" is not a subword as "Michael" has no "t" nor is "Leech" as "Michael" only has one "e" (and "Leech" has two).
It should be obvious that the only words that can appear in an anagram of a subject are subwords of it. Subwords are found by Anagram Genius at the Word Stage.